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TMI Tax Updates - e-Newsletter
June 8, 2019
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Unexplained investment in jewellery and silver articles - looking at the status of the family and the jewellery found during the search, it was held to be reasonable - going strictly by the CBDT Circular, the gold jewellery found in possession is within the permissible limits as belonging to the assessee and other family members including married daughter and children - no addition
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Addition u/s 68 - LTCG by entering into off market transaction of shares - the transaction which has been concluded within four corners of Law cannot be treated as colorable device unless the revenue brings any material to prove such an allegation - the price at which the shares were sold had been not only intimated to the SEBI and Calcutta Stock Exchange but also approved by the SEBI- no addition
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Power of CIT(A) - direction to reopen A.Y. 2010-11- CIT(A) has the powers to decide the appeal against the assessee of a particular assessment which he/she may confirm/reduce or enhance or annulled - giving directions to the A.O to consider for re-assessment for other assessment years for which no appeal is pending before CIT(A), seems to be out of his/her jurisdiction
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Addition of non-genuine agricultural income - AO not disputed holdings of agricultural land - regular maintenance of books of accounts and documentary evidences for each and every transactions for agricultural operations for buying the seeds, labour charges, sale of produced, purchase of fertilizers etc. cannot be possible for various practical reasons - only remedy is estimation of income per acre
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Taxability of share premium - company in which public are substantially interested - AO taxed u/s 56(1) - assessee has received share premium and AO has mandate to invoke only Section 56(2)(viib) and no other section - AO is not correct in bringing this capital investment as income which is not income as per section 2(24) - not taxable
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Assessment u/s 153A - no incriminating material unearthed during search - It is the settled law that for assessment years which are unabated assessments no addition/disallowance can be made without the aid of incriminating materials unearthed during search qua these assessment years
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Deduction u/s. 24 - allowability of certain fixed expenditure to maintain its existence and run business operations - There is no complete cessession of business of the assessee and in order to maintain the establishment the assessee has incurred expenditure which has been claimed to be set off - allowable as business loss
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Provisional attachment u/s 281B - The question of facts cannot be examined under the writ jurisdiction - directed to file appeal and same shall be considered by the Appellate Authority in accordance with law on merits without objecting to the aspect of limitation - order of attachment shall not be enforced until a decision is to be taken by the Appellate Authority on the stay application
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Exemption u/s. 54F - LTCG on sale of jewellery - assessee has invested the full consideration of sale of jewellery in the purchase of the plot of land - The AO is directed to verify the certificate of construction issued by Municipal Corporation, Moradabad keeping in mind that the cost of investment in land is also part of cost of construction of the residential house to avail the exemption u/s 54F - remanded
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LTCG - capital assets OR agricultural land - at the time of sale the assessee’s land was more than 8 KMs away from the local limits of Municipal Council - assessee’s land cannot be treated as a capital asset in terms of section 2(14), Hence the chargeability of capital gain on sale of such agricultural land does not arise - NO capital gain
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Reassessment u/s 147 - The full and true disclosure of the assessee is not in doubt - The ‘recording of reasons’ is mechanical and robotic and the mandate u/s 147 has not been complied with - It was incumbent upon the AO to have had independent ‘reasons to believe’ that there is escapement of tax, even if the initial nudge did emanate from the audit department - reassessment quashed
Customs
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Valuation of imported goods - two set of invoice - no justifiable reasons to show issuance of two separate invoices and has not established that commercial invoice was not the correct value of the imported goods and stands corroborated by the statement of Propritor which have not been retracted - correctly enhanced the assessable value
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Interest on pre-deposit - payment of duty after reversal of duty debited in DEPB scrips is pre-deposit OR duty payment - there cannot be any duty at all when the issue had not yet reached finality and during the pendency of appeal the appellant deposited the entire amount u/s 129E is nothing but pre-deposit of the duty paid - the interest is allwable
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Refund of Customs duty paid - no additional duty of customs was payable due to unconditional exemption notification but assessee forget to claim in bills of entry - while processing officer can re-assess or correct OR being a clerical error it can be corrected u/s 154 of the Customs Act - directed to examine refund and sanctioned on merit after considering the exemption notification
Corporate Law
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Recasting and re opening of the accounts of IL&FS - suspension of Board of Directors of IL&FS - thousands of crores of public money is involved, and in the public interest, the Central Government has thought it fit to handover the investigation with respect to the affairs of IL&FS and other group companies to SFIO. - SC confirmed the order of tribunal.
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Oppression and mismanagement - removal of MD/Director - in the notice there was an agenda for removal of 1st respondent as Managing Director and not director - therefore, the NCLT in exercise of its powers u/s 242 has rightly set aside the decision of the company to remove as director of the company - removal due to loss of confidence does not appear in the Companies Act - eligible for compensation also
Service Tax
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Nature of activity - Manufacture or Business Auxiliary Services? - the final product i.e. toned milk being separate and distinct from the raw milk has to be held as a manufactured item. If that be so, the definition of business auxiliary services would not be satisfied inasmuch as the same specifically excludes the processes which amount to manufacture
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Extended period of limitation - commission to their overseas agent - whatever service tax would have been paid by the appellant under reverse charge mechanism, the same is entitled as the Cenvat credit - therefore, malafides on the part of the appellant are missing for non-payment of service tax under RCM - the extended period of limitation is not invokable
Central Excise
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CENVAT Credit - capital goods - at the time of procuring of capital goods, the appellant was availing Area Based Exemption which was expired during the FY - appellant are entitled to avail cenvat credit in terms of rule 4 (2)(a) of CCR, 2004 on the capital goods for the same financial year when they were manufacturing dutiable as well as exempted final product
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Review of the order - Order 47, Rule 1 r.w.s. 151 of CPC - appeal was dismissed on the ground that the appellant could not show whether it had challenged the earlier order passed by the CESTAT - since said order of the Tribunal had been challenged by the department and is pending consideration - review application is allowed and appeal is restored to its original number.
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Penalty for crossing of threshold limit of SSI and non-payment of duty - both Members were in agreement to remand the matter to the adjudicating for fresh calculation of demand payable after extending the benefit of cenvat credit - since whole order is required to be reconsidered by the adjudicating authority, the issue of imposition of penalty on Shri Prem Khanna, M.D. is also remanded back
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Effective date of the notification - It is now well settled legal principle that all fiscal statutes and provisions should be treated prospective application unless the law specifically indicates otherwise - appellant could have taken credit of EC & SHEC of the inputs or capital goods received in the factory on any day after 01.03.2015 but before 30.04.2015 and utilize it for the payment of Basic Excise Duty
VAT
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Rate of purchase tax on Sugarcane - in the absence of any final decision had been taken by the Government with regard to charging of purchase tax at the rate of 2.2% for the period from 25.01.2000 to 21.03.2001, the assessee cannot derive any benefit from the proceedings dated 09.09.2005 on the issues of Co-operative Sugar Mills - the rate of purchase tax was to be 8.8%.
Case Laws:
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Income Tax
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2019 (6) TMI 356
Reopening of assessment u/s 147 - validity of reasons to believe - non independent application of mind by AO - HELD THAT:- I am thus of the view that, in the light of the proviso to section 147, the assessee having made a complete disclosure of all relevant facts along with the return of income, the impugned proceedings are barred by limitation and also constitute a review of the original order of assessment, impermissible in law. In fact, the Assessing Officer is seen to have applied his mind to the issue in question and the original order of assessment confirms the position that various materials have been called for, such as accounts, financials, tax audit report, etc. and the assessee has also engaged in discussions with the Assessing Officer in regard to the issues that arise therefrom. The full and true disclosure of the assessee is thus not in doubt. AO in this case, is seen to simply reproduce the audit query as his reasons for reopening, which indicate categorically that there has been no independent application of mind in the least to the issued raised. It was incumbent upon the AO to have had independent reasons to believe that there is escapement of tax, even if the initial nudge did emanate from the audit department. The recording of reasons is mechanical and robotic and the mandate u/s 147 has not been complied with. TDS u/s 195 - TDS on foreign remittances relating to production related fees - HELD THAT:- Tax was deducted in respect of the payments effected by the petitioner to Nagie James Associates Ltd (UK), Mark Monitor INC (USA), Cososys SRL (USA) and Buena Vista International (USA). The sole remittance upon which tax was not deducted was in respect of the payment to Asianet Global FZ LLC, UAE, as the payment was in connection with production related fees and the Agreement for Avoidance for avoidance of Double Taxation between India and the UAE does not contain an Article providing for the taxation of Fees for Technical Services. In any event, the details of the remittances as well as the certification in Form 15B to this effect were duly furnished to the assessing authority even during the original proceedings and are, admittedly, on record. Amortisation of cost of programmes/films - , the expenditures incurred and claimed on programmes/film rights HELD THAT:- In fact, the petitioner has been following a consistent method of claiming expenditures in a particular fashion and the Department has accepted the methodology of valuation and claim for all years except the assessment years in question, being AY 2011-12 and 2013-14. In fact, even after the initiation of the present proceedings for re-assessment, orders under scrutiny have been passed in respect of AY 2015-16 accepting the petitioners claim. The view proposed to be adopted in the impugned re-assessments is thus a deviation, an aberration so to say, from the regular and consistent view taken by the Income Tax Department in regard to this issue. The expenditures incurred on Programme/film rights have been found to be revenue in nature and the stand of the assessee accepted. Thus, quite apart from the fact that as rejected the legal arguments put forth by the respondent to support the impugned proceedings, they are also found to be contrary to the settled principles of consistency. The principle of res judicata would not apply in matters of assessment under the Income tax Act, as each assessment year is separate and distinct, to be looked into independently and without reference to other years. Be that as it may, it is too well settled that there should be no deviation with respect to a consistent view except where such deviation is justified in law or on facts. As far as the present matters are concerned, there is no dispute that the view of the Department has remained consistent through the years, except for the assessment years before me now. Supreme Court in the case of PARASHURAM POTTERY WORKS CO. LIMITED VERSUS ITO [ 1976 (11) TMI 1 - SUPREME COURT] held that income-tax assessment orders are concerned, they cannot be reopened on the scope of income escaping assessment u/s 147 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. - Decided in favour of assessee.
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2019 (6) TMI 355
Provisional attachment u/s 281B - non-speaking order - demand u/s 156 pursuant to assessment u/s 143(3) - attaching properties belonging to the assessee in order to protect the interest of the revenue - HELD THAT:- There is some force in the arguments advanced by the learned counsel for the revenue as the assessment order is challenged on the factual aspects in as much as the details of names and PAN numbers said to have been furnished by the assessee to whom the payments are made to establish the claim made, the same necessarily requires to be examined by the appellate authority, the machinery provided under the Act. The question of facts cannot be examined under the writ jurisdiction. The petitioner is relegated to the Appellate Forum to assail the assessment order impugned. If such an appeal is preferred within a period of three weeks from today, the same shall be considered by the Appellate Authority in accordance with law on merits without objecting to the aspect of limitation. The order passed by the AO u/s 281B has been ceased to have effect after the expiry of six months from the date of the order of the assessment. Hence, the apprehension of the petitioner regarding the enforcement of the provisional attachment further would not arise and the same can be allayed with a direction to the respondent authorities that the said order shall not be enforced until a decision is to be taken by the Appellate Authority on the stay application, if to be filed in the appeal proceedings by the assessee within a period of three weeks as aforesaid and is ordered accordingly.
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2019 (6) TMI 354
Condonation of delay - delay in filing Form No.10 - order passed u/s 119 (2)(b) - petitioner trust is duly registered under Section 12AA - Ld. Senior Counsel submitted that, the order rejecting the application under Section 119 (2)(b) was passed on 26.12.2018 and immediately on the next day, the income tax authorities have passed an assessment order and notice of demand has also been served upon the petitioner trust - HELD THAT:- Issue notice to the respondents returnable after four weeks. Till then, the ad-interim relief in terms of prayer Clause 'B'.
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2019 (6) TMI 353
Addition u/s 68 - income from undisclosed source - long term capital gain by entering into off market transaction through plain agreement - share of a company listed in the Calcutta Stock Exchange - acquirer company also made public announcement in newspapers and made open offer to the shareholders - HELD THAT:- When the transaction which has been concluded within four corners of Law cannot be treated as colorable device unless the revenue brings any material to prove such an allegation. In this case, as will appear from the aforesaid details and documents filed, the price at which the shares were sold had been not only intimated to the SEBI but even to Calcutta Stock Exchange both by the Acquirer and Seller. It is an accepted fact that whenever share in the Stock Exchange are sold as off market transaction, it is sold at the intrinsic value of shares and that is what has happened in this assessee`s case under consideration. When purchase and sale of shares were supported by proper contract notes, deliveries of shares were received, the shares were purchased and sold through recognized broker and the sale considerations were received by account payee cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG. We find that in the instant case, the addition has been made only on the basis of the suspicion. The revenue had not brought any material on record to support its finding that there has been collusion / connivance between the Purchaser and the assessee for the introduction of its unaccounted money. Sale having taken place at the price duly approved by the SEBI, no adverse inference can be drawn against the assessee company simply on assumptions and presumptions and mere suspicion.Therefore, the addition made u/s 68, as income from undisclosed source was rightly deleted by the ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition. His order on this addition is therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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2019 (6) TMI 352
Bogus LTCG - addition u/s 68 - rejection of assessee s claim of LTCG on sale of those shares - HELD THAT:- When the Assessing Officer has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain. Sale of shares of M/s. KAFL which was dematerlized in Demat account has taken place through recognised stock exchange and assessee received money through banking channel. So, assessee has explained the nature and source of the money with supporting documents and thus has discharged the onus casted upon him by producing the relevant documents mentioned, accordingly, the question of treating the said gain as unexplained cash credit u/s 68 cannot arise unless the AO is able to find fault/infirmity with the same. Note that the source of the receipt of the amount has been explained and the transaction in respect of which the said amount has been received by assessee has not been cancelled by the stock exchange/SEBI. So, it is difficult to countenance the action of AO/Ld. CIT(A) in the aforesaid facts and circumstances explained above. There is also nothing on record which could suggest that the assessee gave his own cash and got cheque from the alleged brokers/buyers. The assessment refers also to some third party statement of Shri Sunil Dokania which was admittedly recorded behind the back of the assessee and the assessee has neither been allowed to cross examine this person by the assessee nor the statement of Shri Sunil Dokania furnished to assessee, so the statements even if adverse against the assessee cannot be relied upon by the AO to draw adverse inference against the assessee It is clear from the above that the facts of the case of the assessee are identical with the facts in the above case wherein the co-ordinate bench of the Tribunal has deleted the addition in the case of Shri Manish Baid [ 2017 (10) TMI 522 - ITAT KOLKATA] in respect of sale of shares of M/s KAFL - direct the AO not to treat the long term capital on sale of shares of M/s KAFL as bogus and delete the consequential addition.- Decided in favour of assessee.
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2019 (6) TMI 351
Addition of non-genuine agricultural income - HELD THAT:- We observe that the Revenue authorities have nowhere disputed that the assessee holds agricultural land measuring 10 acres since last many years. It is a known fact that regular maintenance of books of accounts and documentary evidences for each and every transactions entered into during the course of agricultural operations for buying the seeds, labour charges, sale of produced, purchase of fertilizers etc. cannot be fully documented for various practical reasons. AO has also not placed any contrary material to support its finding. Only remedy is estimation of income per acre. In certain cases as referred in the finding of the Ld. CIT(A), the tribunal has estimated income per acre at ₹ 15000/- during A.Y. 1998-99 and ₹ 25000/- during A.Y. 2005-06. We are of the view that Ld. CIT(A) has rightly estimated the agricultural income of ₹ 30000/- per acre for A.Y. 2009-10. No interference is therefore called for in the well reasoned finding of the Ld. CIT(A). We uphold the same and dismiss the revenue s ground. Unexplained investment in gold - HELD THAT:- CIT(A) has rightly given the benefit of 350 gms of gold jewellery (250 gms for daughter and 100 gms for son) thereby giving relief of ₹ 5,80,555/- and confirming the remaining amount as unexplained investment at ₹ 86,535/-. No reason to interfere in the finding of Ld. CIT(A) deleting the addition of ₹ 5,80,555/- and same is upheld. Addition for unaccounted investment - on money paid for purchase of land - adition based on seized loose papers - HELD THAT:- The impugned addition for unaccounted investment in the land has rightly been deleted by CIT(A) as they were merely based on the rough jottings on the alleged seized loose papers which were not signed by any of the parties, nor transaction mentioned therein have actually taken place nor revenue has been successful to place any contrary material in the form of valuation report of the impugned land to support the market price of land adopted for making the addition ON MONEY payment. Therefore the alleged seized loose papers are Dumb documents and addition cannot be made on such dumb documents. Rather the jottings on the seized papers were stated to be a part of future planning and references of the transaction in the loose papers are not supported by any corroborative evidence and the evidence in the form of registered sale deeds only indicates that the transaction of purchase/sale of land between the various concerned parties was actually entered at consideration of ₹ 5 crores only and no evidence of any ON MONEY of ₹ 8,74,60,600/- has been paid - No reason to interfere in the finding of Ld. CIT(A) deleting the addition Addition of non-genuine unsecured loans - admission of additional evidence - HELD THAT:- In the interest of justice we accept the request of both the parties and set aside this issue of unexplained cash credit to the file of CIT(A)for afresh adjudication with a direction that the additional evidences filed by the assessee which were not placed before the assessing officer should be sent to the assessing officer calling for remand report and thereafter decide the issue afresh as per the provisions of law after giving reasonable opportunity of being heard to the assessee. Validity of reassessment u/s 148 - HELD THAT:- There was certain information relating to these 14 assessee s found by the search team during the search u/s 132 of the Act conducted on 21.7.2008 at the premises of Mr. Mukesh Sharma including a memorandum of agreement for purchase of land by Mr. Mukesh Sharma and 14 other parties. Certain loose papers were also seized which as per the Ld. A.O indicated some undisclosed investment. Return were filed on 31.03.2010 and notice u/s 148 of the Act issue within 4 years i.e. before 31.03.2014. Proper opportunity was given to assessee(s) to reply to the reasons recorded for reopening. In our considered view the cases of 14 assessee s were fit case for issue of notice u/s 148 of the Act and for conducting reassessment proceedings u/s 147. Addition on protective basis in the hands of the assessee s for the unaccounted investment in purchase of 1.9 hectare land jointly with Mr. Mukesh Sharma purchased from Mr. Vinod Vaish - addition based on loose papers - HELD THAT:- Following the holding in Assessment Year 2009-10, we are of the view that both the lower authorities were not justified in making the addition on protective basis in the hands of all the 14 assessee s. We accordingly allow this common issue in the case of the 14 assessee s and delete the addition made on protective basis on un accounted investments in purchase of land Disallowance for expenses - difference between the amount deposited in the bank/amount of land taken and the amount admitted as undisclosed income - HELD THAT:- In the instant case though the actual source of earning the undisclosed income has not been stated but claiming certain expenses against the earning of said undisclosed income cannot be brushed aside. However, Ld. CIT(A) failed to adjudicate this issue and in the interest of justice we are of the view that this common issue needs to be set aside to the file of Ld. CIT(A) for adjudication after giving reasonable opportunity of being heard to the assessee s. Power of CIT(A) - exceeding of Jurisdiction - direction to the Ld. A.O to reopen the cases for A.Y. 2010-11- appeal relates to A.Y. 2009-10 - HELD THAT:- CIT(A) has the powers to decide the appeal against the assessee of a particular assessment which he/she may confirm/reduce or enhance or annulled. The order of the assessment relates to particular assessment year or assessment years. Ld. CIT(A) is bound to adjudicate the issues emanating out of the appeal for the respective assessment year. Giving directions to the A.O to consider for re-assessment for other assessment years for which no appeal is pending before CIT, in our view seems to be out of his/her jurisdiction. In the instant case it seems that Ld. CIT(A) has exceeded her jurisdiction of giving direction for reopening of cases for Assessment Year 2010-11 because the appeals of the assessee(s) were pertaining to Assessment Year 2009-10 only. We therefore allow this common issue raised by the respective assessee s.
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2019 (6) TMI 350
Assessment u/s 153A - no incriminating material unearthed during search on the basis of which the assessment was framed by the AO - HELD THAT:- We take note that the AO did not take the aid of any incriminating materials unearthed during search qua these assessment years to make the addition. We note that undisputedly these assessment years were not pending before the AO on the date of search and so it is an unabated assessment. So as per the settled law, in sec. 153A assessment pursuant to search u/s 132 of the Act, for assessment years which are unabated assessments as in the present cases before us, no addition/disallowance can be made without the aid of incriminating materials unearthed during search qua these assessment years. - Decided in favour of assessee.
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2019 (6) TMI 349
Eligible for deduction u/s. 54F - disallowing the construction cost on the presumption that the same is allowable at the time of calculating capital gains as cost of improvement - HELD THAT:- The assessee is eligible for deduction u/s. 54F and purchased the plots and constructed residential dwellings on those plots, we hereby hold that the assessee is eligible for the deduction and confirm the order of the CIT(A) to that extent. At the same time, we are not in support of the decision of the CIT(A) wherein the cost of the construction claimed by assessee has not been allowed and directed the same to be treated as cost of improvement. The decision of the CIT(A) is contrary to the provisions of section 54F (1), wherein the capital gains can be utilized for either construction or purchase of house. Since in this case, the amount has been utilized for the construction of the house, the amount is eligible for deduction u/s 54F in accordance with law. - Decided in favour of assessee.
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2019 (6) TMI 348
Exemption u/s 11 - Charitable activity or not? - income arising in the form of sponsorship out of the activity of holding Fairs, Meetings, Conferences and Seminars - appellant has been granted registration u/s 12AA since 1995 and onwards - HELD THAT:- Since the factual matrix of the appellant s case for the AY 2012-13 is identical with that involved in AY 2011-12 [ 2016 (11) TMI 600 - ITAT KOLKATA] , we have no hesitation in holding that the ratio laid down in the decision of the coordinate Bench of this Tribunal holds good and applies to the year under consideration as well. Applying the said decision we hold that the appellant s activity of holding trade fairs, exhibitions and conferences was not in the nature of trade, commerce or business and therefore there was no violation of Section 2(15) of the Act. Accordingly we hold that the lower authorities were legally unjustified in not granting the appellant the benefit of Section 11. We note that even though the appellant realized surplus from organizing fairs exhibitions yet there was express understanding between the appellant and the participants that the surplus, if any, remaining after meeting the cost and expenses for holding the events would be transferred to infrastructure fund of the appellant. We therefore find that the surplus generated from holding the events was an unintended surplus which the contributor at the outset had agreed to appropriate as their contribution to Own Infrastructure Fund of the appellant and therefore it was corpus in nature. Viewed from any angle therefore the surplus was not bearing income character in the hands of the appellant and therefore the lower authorities were unjustified in assessing the same as business income of the appellant. - Decided in favour of assessee Treating the corpus donation - admission fees from its members is exempt u/s 11(1)(d) or not? - HELD THAT:- As relying on DIVINE LIGHT MISSION. [ 2004 (4) TMI 25 - DELHI HIGH COURT] we hold that the membership fees received from members were towards the corpus and therefore rightly claimed exempt u/s 11(1)(d). The AO is therefore directed to delete the addition - Decided in favour of assessee
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2019 (6) TMI 347
Unexplained investment in jewellery and silver articles - Claimed by the appellant to have been received from friends and relatives on marriage and other occasion - search and seizure action u/s 132 - jewellery is personal wearing - what is the reasonable quantity of jewellery which can be considered as acquired/received by the assessee over the period of time and which can be considered as explained for tax purposes? - HELD THAT:- The assessee is married for last 30 years and the family of the assessee consists of his wife, three daughters out of which two are unmarried and one unmarried son. It is not in dispute that the assessee over the period of time had purchased some gold jewellery for himself and his family members, and further customary possession of gold jewellery/silver items on account of marriage gifts and gifts on other social occasions and festivities to the assessee and his family members cannot be denied. The statement of the assessee has to be read as a whole and not in parts. The Revenue cannot take the stand that only part of the statement is accepted and remaining is not acceptable. Where the Revenue disputes a part of the statement as not correct, the onus shifts on the Revenue to prove otherwise and not the assessee. Therefore, going strictly by clause (i) of the CBDT Circular dated 11.05.1994, the gold jewellery found in possession of the assessee is within the permissible limits as belonging to the assessee and other family members including married daughter and children. The assessee belongs to a reputed old Jagirdar family and so enjoying high status in society, married about 30 years back and has three daughters and one son and possession of gold and silver jewellery is customary in the Indian society and also gifts on marriages and other social functions. The Courts have held that where the CBDT looking to such customs and practices prevailing throughout India, in one way or the another, came out with this Circular and the search team makes no such seizure effectively accepting the status of the assessee, customs and practices and possession of the jewellery, it should also mean that to the extent of the aforesaid jewellery, found in possession of the assessee, even source cannot be questioned. In the present case, looking at the status of the family and the jewellery found during the search, it was held to be reasonable and therefore, the search team, in the first instance, did not seize the said jewellery and thus, in our view, subsequent addition is also not justified on the part of the Assessing Officer. Similar is the position regarding silver jewellery and items found in possession of the assessee in respect of which the source can be said to be duly explained. See CIT., ALWAR VERSUS SATYA NARAIN PATNI [ 2014 (5) TMI 1002 - RAJASTHAN HIGH COURT]. The the matter is decided in favour of the assessee and against the Revenue.
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2019 (6) TMI 346
TP adjustment of guarantee commission - HELD THAT:- There are number of decision such as CIT Vs. Everest Kento Cylinder Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] and Thomas Cook India Ltd. Vs. ACIT [ 2016 (5) TMI 262 - ITAT MUMBAI] are on record in which the guarantee commission has been restricted to the extent of 0.5% of guarantee amount. In view of the above mentioned law, we are of the view that it would be the reasonable to determination the Arm s Length Price (ALP) in connection with the guarantee commission @ 0.5% of the guarantee amount. Accordingly. we set aside the finding of the DRP in this regard and restrict the guarantee fee @ 0.5% of the guarantee amount. Accordingly we decide the issue in favour of the assessee against the revenue. Addition of notional interest on loan given to associate enterprises - HELD THAT:- Since the assessee has charged @ 9.5% of the per annum, therefore, there is no need for making the TPO adjustment in this regard. Accordingly, we are of the view that the DRP has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Addition of notional interest on investment in subsidiary as deemed loan - HELD THAT:- We noticed that the issue has been decided on the basis of decision of Hon ble ITAT in the assessee s own case for A.Y. 2009-10 [ 2014 (11) TMI 845 - ITAT MUMBAI] . Accordingly, we are of the view that the DRP has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Disallowance of ESI u/s 2(24)(x) r.w.s 36(1)(va) - HELD THAT:- On appraisal of the above mentioned finding, we noticed that the assessee deposited the contribution towards employees ESIC earlier to the due date of filing the return of income, therefore, no doubt in the said circumstances, the same is not liable to be disallowed. DRP has also relied upon the decision of the various authorities which has been mentioned in the order. The facts are not distinguishable at this stage. Therefore, in the said circumstances, we are of the view that the DRP has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Disallowance u/s 14A - HELD THAT:- The assessee has earned the dividend income of ₹ 1,11,636/- and suo-motu disallowed. At the very outset, the assessee agreed to restrict the disallowance to the extent of dividend income, therefore, in the said circumstances and by relying upon the law settled in PCIT Vs. State Bank of Patiala [ 2018 (11) TMI 1565 - SC ORDER] we restrict the addition to the extent of dividend income to the tune. Accordingly, this issue is decided in favour of the assessee against the revenue. Disallowance u/s 14A r.w. Rule 8D and computation of book profit u/s 115JB - HELD THAT:- Godrej Boyce Manufacturing Co. Ltd.V/s. DCIT [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] directing the AO to work out the disallowance on a reasonable basis and not under Rule 8D under the Income Tax Rules for the A.Y. 2007-08. The Tribunal has merely followed the decision of the jurisdictional High Court and no fault can be found with the same. MAT computation - the matter of controversy has already been discussed and decided in the case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . In view of the above mentioned decision, we are of the view that the provisions of u/s 14A r.w. Rule 8D is not applicable upon the books profit u/s 115JB. Accordingly, we delete the said addition raised against the assessment u/s 115JB of the Act. Accordingly, we decide this issue in favour of the assessee against the revenue.
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2019 (6) TMI 345
Exemption u/s. 54F - LTCG on sale of jewellery - investment of full sale consideration received on the sale of jewellery in the purchase of the plot of land - certificate of construction issued by Municipal Corporation, Moradabad submitted afterwards - HELD THAT:- There is no dispute that the assessee has invested the full sale consideration received on the sale of jewellery in the purchase of the plot of land. It is also not in dispute that before the lower authorities the assessee could not adduce any evidence. The certificate from municipal corporation, Moradabad has been furnished for the first time. In the interest of justice restore this issue to the files of the Assessing Officer. The Assessing Officer is directed to verify the certificate of construction issued by Municipal Corporation, Moradabad and decide the issue afresh as per provisions of law, keeping in mind that the cost of investment in land is also part of cost of construction of the residential house to avail the exemption u/s. 54 F Act. Needless to mention the Assessing Officer shall give a reasonable opportunity of being heard to the assessee - Decided in favour of assessee allowed for statistical purpose.
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2019 (6) TMI 344
Monetary limit - low tax effect - maintainability of appeal - HELD THAT:- From Clause 12 13 of the above said circular, it is clear that these instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 20,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No. 3 of 2018 dated 11.07.2018, we are of the view that the Revenue should not have filed the instant appeals before the Tribunal. The appeal of the department is dismissed.
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2019 (6) TMI 343
Deemed dividend u/s 2(22)(e) - assessee company is not shareholder - taxability of loan amount as deemed dividend - M/s. Rajratna Energy Holdings Pvt Limited is a common shareholder for both the assessee Company and M/s. AIC Solar Project Pvt Limited who has advanced a loan to the assessee company - HELD THAT:- The issue is squarely covered by the decision of the Hon ble Supreme Court in the case of CIT Vs. Madhur Housing and Development Co. [ 2017 (10) TMI 1279 - SUPREME COURT] wherein held although there were persons having substantial interest in the assessee-company and the company which gave the loan, the assessee-company not being shareholder of the company which gave the loan, the loan was not assessable as deemed dividend in the assessee's hands - Decided in favour of assessee.
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2019 (6) TMI 342
Deduction u/s. 24 - disallowance of business loss - assessee is not entitled to any further deduction other than those provided u/s. 24 - allowability of certain fixed expenditure to maintain its existence and run business operations and therefore has set off thus minimum bare expenses as business expenses - HELD THAT:- There is no complete cessession of business of the assessee and in order to maintain the establishment the assessee has incurred expenditure which has been claimed to be set off. We are of the considered view that the assessee has incurred genuine business expenditure, during the year under consideration deduction whereof ought to have been allowed u/s. 24. In that view of the matter the expenditure claimed by the assessee company of ₹ 8,75,403/- as business loss is hereby allowed. The addition on this ground as made by the authorities below is thus deleted. - Assessee s appeal is allowed.
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2019 (6) TMI 341
LTCG - capital assets in terms of section 2(14) OR agricultural land - applicability of section 50C - HELD THAT:- In this case it is evident from the record that at the time of sale the assessee s land was more than 8 KMs away from the local limits of Municipal Council. CIT(A) was thus not correct in rejecting the additional evidence which was merely corroborative in nature as supported the earlier two letters from Tehsildar obtained by the AO in his inquiry; and in order to reconcile the same, assessee has filed a certificate from the revenue authorities. To adjudicate the issue and in the interest of justice same should have been admitted by the CIT(A). And more so, once AO was confronted with the said certificate and remand report was called for. Accordingly, it is held that assessee s land cannot be treated as a capital asset in terms of section 2(14), because it was an agricultural land and was more than 8 KMs away from the local limit of the municipality and population was also less. Hence the chargeability of capital gain on sale of such agricultural land does not arise. The addition thus made is deleted. - Decided in favour of assessee.
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2019 (6) TMI 340
Taxability of share premium - company falls under the category of the company in which public are substantially interested - AO invoked Section 56(1) to bring this transaction as income from other sources - this transaction is capital investment and not an income within the meaning of Section 14 - HELD THAT:- This head of income consists of two parts i.e. section 56(1) and section 56(2). The first part i.e. sub-section (1) deals with income of every kind, which does not fall in any of the head of income A E and also which is not to be excluded from the total income under this Act. The important thing is, it should fall within the definition of income u/s 2(24). At the same time, sub-section (2) of section 56, deals with specific income which is not income as per section 2(24) but specifically brought under the definition of income by the Legislature. Therefore, the income which cannot be brought to tax u/s 56(2), under specific head, AO cannot bring to tax even u/s 56(1) Assessee has received share premium and AO has mandate to invoke only Section 56(2)(viib) and no other section. This transaction will never fall in any of the heads of income as per Section 14. Therefore, in our considered view, AO is not correct in bringing this capital investment as income of the assessee after satisfying himself that assessee s case does not fall u/s. 56(2)(viib). Therefore, the addition made by AO is deleted. Disallowance u/s 14A - valuation difference of mutual fund - real dividend income - HELD THAT:- We notice that assessee made investment in mutual funds and the value as on Balance Sheet date stood at ₹ 25,10,99,520/-. The difference between actual investment and value as on Balance Sheet was declared as dividend income. This is not actual receipt of dividend during this year, it is only difference in valuation of investment. The position will keep changing every year. The same will be recognized in the Profit and Loss A/c. The investment value may increase compared to previous year status or decrease depending upon the performance of the fund. The actual increase in value will be determined only when it is transferred or matured. This income recognised by assessee is not real dividend income and the real dividend income alone is exempt from tax net, not the notional recognition of the income at the Balance Sheet date. The value difference at the time of disposal will be chargeable to tax as Long Term Capital Gain not as dividend income. Therefore, in our view, this recognition of difference in value of investment is not the dividend income and hence, Assessing Officer cannot invoke Section 14A in this transaction. - Decided in favour of assessee.
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2019 (6) TMI 339
Addition u/s 68 - HELD THAT:- The acceptance of the sum being received from the assessee, i.e., in the case of Shyam Puri (HUF) , cannot operate to prejudice the assessee as the assessee is not a party to those proceedings. True, the assesssee cannot take a different stand in her case, and the principle of approbate and reprobate, applicable to tax proceedings, apply, so that the receipt by the assessee is admitted. Where so, the assessee s explanation would in that case have to be accepted in full, i.e., of it being the sale proceed by her sons shop. Her explanation cannot be accepted in part. In fact, matters are to be decided on the basis of evidence. It is for such reasons, that it is oft-stated by the higher courts of law that the substantive and protective assessments are heard and decided together by the appellate authorities. The assessment in case of Shyam Puri (HUF) has become conclusive inasmuch as it is not pending in further appeal. No case for bringing the sum of ₹ 16 lacs in the assessee s hands is made out. Per contra, the assessee cannot be allowed capital loss of ₹ 2.52 lacs, i.e., as claimed. Decide accordingly. Addition on account of credit entries in the assessee s bank account with PNB, Purani Mandi, Jammu - assessee, who claims the same to be dividend or interest from shares or debentures, exempt u/s. 10(34D), or, alternatively, maturity proceeds of UTI-MIP(IV), could not substantiate either with any document, resulting in the same being assessed as unexplained credit in her bank account, i.e., u/s. 69A, the assessee being admittedly in receipt of money to that extent, so that the onus to satisfactorily explain the nature and source of the same the said bank deposits, was on her - HELD THAT:- The bank account is not on record. The impugned deposits are in a bank account maintained at Jammu, where the assessee resides for the past several years now. There is nothing to show that the credits are from, as stated, UTI, in which case the assessee definitely has a case in-as-much as the same could only be a capital receipt (on redemption), or dividend, etc. There is no improvement in the assessee s case even before me, so that I am constrained not to interfere; the position of law, as aforestated, being amply clear.
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2019 (6) TMI 338
Denial of natural justice - CIT(A) in passing the ex-parte order without giving opportunity of being heard - issue relates to the reopening of the assessment and additions on merit - HELD THAT:- The assessee has given the same address for the purpose of service in the appeal papers as was given before the CIT(A). The observations of the CIT(A) clearly show that the notices issued for hearing of the appeal before the ld. CIT(A) have not been served upon assessee. No attempt has been made to serve the assessee personally through the process server of the Department. Therefore, the appellate order is passed without giving opportunity of being heard to the assessee in violation of principle of natural justice. CIT(A) then decided the appeal on merit merely by observing that the assessee has neither given any evidence or material or reasoning as to how reopening of the assessment is bad in law and as to how additions on merit are unjustified. CIT(A) did not verify from the assessment record that all the evidences are part of the record of the Assessing Officer. Therefore, even if ld. CIT(A) wanted to decide the appeal of the assessee ex parte on merit, in such circumstances, the assessment record could have been summoned for deciding the appeal of the assessee on merits. CIT(A) noted that neither the assessee nor the Departmental Officer appeared at the time of hearing of appeal, therefore, none of the documentary evidences on record have been considered by him at appellate stage while dismissing the appeal of the assessee without giving opportunity of being heard to the assessee. Whatever statements were recorded by the Department were not subjected to cross-examination on behalf of the assessee. All these issues raised in the written submission have not been dealt either by the Assessing Officer or by the ld. CIT(A). Since no findings of fact have been recorded by the authorities below on merit on all the issues and that, no opportunity have been given to the assessee to argue the appeal on merit at appellate stage, therefore, the entire matter requires reconsideration - thus restore the entire matter to Ld. CIT(A) with the direction to re-decide the appeal strictly on merit as per law by giving reasonable/sufficient opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.
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2019 (6) TMI 311
Interest payable u/s 234B - Collection of interest for non-deposit of advance tax in respect of the consideration received by the non-resident assessee - payer is liable to deduct TDS on payment - PE in India - DTAA - HELD THAT:- This Court notices that for another assessment year this Court had, following its previous order in The Commissioner of Income Tax International Taxation-3 vs. Shanghai Electric Group Co. Ltd. [ 2018 (4) TMI 1716 - DELHI HIGH COURT] rejected the Revenue‟s appeal. Tribunal had followed the decisions of this Court in the cases of Director of Income Tax vs. Jacabs Civil Incorporated [ 2010 (8) TMI 37 - DELHI HIGH COURT] , Director of Income Tax, International Taxation vs. GE Packaged Power Inc. and ors. [ 2015 (1) TMI 1168 - DELHI HIGH COURT] and Commissioner of Income Tax, International Taxation-2 vs. ZTE Corporation 2017 (1) TMI 1338 - DELHI HIGH COURT] Since the Tribunal followed the rulings of this Court no question of law arises. These appeals are dismissed as untenable along with pending applications.
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Customs
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2019 (6) TMI 337
Penalty u/s 114(iii) of the Customs Act, 1962 - no evidence or partly relevant and partly irrelevant evidence - HELD THAT:- The legal maxim Cursus Curine Est Lex Curise i.e. the practice of the Court is the law of the Court is invoked. At the request of Mr. Jetly, this appeal is adjourned by a period of four weeks from today to enable Mr. Jetly to obtain instructions and file appropriate affidavit, if so advised. Stand over to 1st July, 2019.
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2019 (6) TMI 336
Release of passport - Customs Act, 1962 - HELD THAT:- This Court is not proposing to examine the stage of investigation or delay thereof. The investigation now is completely seized by the respondent under the Act. The fact of the matter is depending on the nature of allegations and also the intensity of these allegations, detailed investigation certainly is required but the investigation ought to be completed within some reasonable definite time and necessary orders are passed in accordance with law. This Court is of the view that the respondent can be directed to complete the investigation pending as expeditiously as possible, preferably within three months from the date of receipt of a copy of this judgment - The respondent since is subjected to timelines for completion of investigation, it is needless to observe that the petitioner without fail or demur extends full co-operation and participates in the ongoing investigation. Petition disposed off.
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2019 (6) TMI 335
Valuation of imported goods - enhancement of the assessable value - retraction of statements - imposition of penalties - HELD THAT:- The enhancement of the assessable value stands done by the Lower Authorities based upon the comparison of the original commercial invoices issued by the Chinese supplier and invoices produced by the appellant before customs. The appellant had not advanced any justifiable reasons to show issuance of two separate invoices and has not established that commercial invoice was not the correct value of the imported goods. The said fact further stands corroborated by the statement of Shri Dharmendra Kumar which have not been retracted - the enhancement of the value leading to confirmation of demand of duty of ₹ 1,85,212/- and of ₹ 6,524/- are appropriated. Penalty u/s 112(b)(ii) of Customs Act - HELD THAT:- Penalty are to the extent of 100%, without giving any option to the appellant to pay reduced penalty of 25% within a period of 30 days of the passing of the order. As such while upholding the imposition of penalty to the extent of 100% in terms of said Section 112, we hold that if the appellant deposits the said penalty within the period of 30 days from the passing of the present order, the same shall stand reduced to 25%. Penalty u/s 114 A and 114AA of the Customs Act - HELD THAT:- As the appellant have already been imposed penalty under Section 112 of the Customs Act, separate imposition of penalty to the extent of almost 5 times of the differential value of the goods is not justified - the penalties imposed under Section 114 and 114AA of the Act are set aside. Appeal allowed in part.
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2019 (6) TMI 334
Refund of Customs duty paid - denial of refund on the ground that the assessments in the bills of entry in question were final and the importer has not challenged the assessment order - HELD THAT:- The bills of entry in question have all classified the goods in question under chapter heading 4403990 and therefore no additional duty of customs was payable on them. However, this notification was not mentioned by the appellant and therefore no exemption was given to the appellant. This is a clerical error in the bills of entry but not by the officer but by the appellant themselves. In case of processing of bill of entry in customs EDI where the bill of entry which was sent to the officer for assessment, the officer can re-assess or correct the bills of entry. In such a case the officer should have corrected the bills of entry by giving the benefit of an unconditional exemption notification otherwise applicable to the Bill of Entry in question. If such was not the case, then the clerical error of not extending the benefit of an exemption notification (that not claimed by the appellant) can be corrected under Section 154 by the successor of the officer. Two Bills of Entry where no assessment at all was done by the officer but the goods were cleared from the customs EDI systems automatically - HELD THAT:- The refund can be examined and sanctioned on merit after considering the eligibility of the appellant to the exemption notification in respect of bills of entry - The matter is accordingly remanded back to the original authority to consider the eligibility of the appellant to exemption notification and decide the refund application accordingly. Appeal allowed by way of remand.
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2019 (6) TMI 333
Interest on pre-deposit - payment of duty after reversal of duty debited in DEPB scrips is pre-deposit OR duty payment - Section 129E of the Customs Act, 1962 - HELD THAT:- Section 129E required the appellant to deposit, pending an appeal, the entire amount of duty or interest demanded or penalty levied. In cases where the appellant files a stay application, the CESTAT often grants either complete waiver of pre-deposit or a partial waiver thereof. In case of partial waiver the appellant deposits some amount as directed by the CESTAT. It is the case of the first appellate authority that only when such application is made and part of the payment is made in pursuance of the stay order it can be called as pre-deposit. Where the entire amount of duty demanded is paid, it is the duty and not pre-deposit. A plain reading of section 129E does not say so. In fact, there cannot be any duty at all when the issue had not yet reached finality. Pending an appeal before the CESTAT the appellant deposited the entire amount under section 129E which is nothing but pre-deposit of the duty paid. Consequently, the interest, as applicable on pre-deposit, needs to be paid to the appellant. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (6) TMI 332
Re casting and re opening of the accounts of IL FS - suspension of Board of Directors of IL FS - Whether in the facts and circumstances of the case, can it be said that the order passed by the learned Tribunal is illegal and/or contrary to Section 130 of the Companies Act? HELD THAT:- In the present case, the Central Government has already constituted SFIO and has also ordered investigation into the affairs of IL FS and other group of companies and the investigation by the SFIO is under progress. It is also required to be noted that SFIO had also submitted its preliminary report. In the preliminary SFIO report, there are specific findings with respect to mismanagement of the affairs of the aforesaid companies, and also with respect to preparing fraudulent accounts. At this stage, it is also required to be noted that ICAI had also conducted an enquiry into the accounts for the past five years, and in the preliminary report, the ICAI has mentioned that accounts for the post five years have been prepared in a fraudulent and negligent manner by the erstwhile auditors . That the Registrar of Companies had also conducted an enquiry under Section 206 of the Companies Act and prima facie concluded that mismanagement and compromise in corporate governance norms and risk management has been perpetuated on IL FS and its group companies by indiscriminately raising long term and short term loans/borrowings through public sector banks and financial institutions. Considering the fact that thousands of crores of public money is involved, and in the public interest, the Central Government has thought it fit to handover the investigation with respect to the affairs of IL FS and other group companies to SFIO. Larger public interest has been involved and reopening of the books of accounts and recasting of financial statements of the aforesaid companies is required to be carried out in the larger public interest, to find out the real truth, and as observed hereinabove both the conditions precedent while invoking power under Section 130 of the Companies Act are satisfied/complied with, therefore in the facts and circumstances of the case, we are of the opinion that the order passed by the learned Tribunal passed under Section 130 of the Companies Act, confirmed by the learned Appellate Tribunal, is not required to be interfered with. Appeal dismissed.
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2019 (6) TMI 331
Oppression and mismanagement - order under Section 242 of the Companies Act, 2013 - position of Mr. K.K. Jagadish as Managing Director of the Company on 15.5.2015 - HELD THAT:- We have also seen the copy of Special Notice dated 15.5.2015 (Page 198) by which it is proposed that a Meeting will be held on 7th August, 2015 to removed 1st respondent as Managing Director. We have also seen the minutes of the meeting of the Board of Directors held on 15.5.2015 (Page 201 to 203) in which it was resolved that 1st respondent be and is hereby removed from the Directorship and Office of Managing Director of the company with effect from the date of approval of this resolution by the shareholders. We have already observed that in the notice there was an agenda for removal of 1st respondent as Managing Director and not director. Therefore, the NCLT in exercise of its powers under Section 242 of the Act has rightly set aside the decision of the company to remove 1st respondent as director of the company. Financial Collaboration Agreement (FCA) - HELD THAT:- As per FCA, only 10% shares were fixed for 1st respondent and accordingly he has been allotted the requisites shares. There is no evidence brought on record that 1st respondent is to get additional 15% shares from 2nd respondent either through FCA or any other documents. Therefore, we are in agreement with the conclusion drawn by the NCLT on this count. The arguments advanced by the appellant that 1st respondent was removed due to loss of confidence. We observe that loss of confidence as argued by the appellant does not appear in the Companies Act. We observe that the NCLT has rightly given his findings and arrived at to give compensation of ₹ 105 lakhs (calculated at the rate of ₹ 35 lakhs p.a. for three years) together with interest @ 10% from the date of removal of the 1st Respondent as Managing Director plus other benefits as already offered, till the date of payment by the company/other respondents. Appeal dismissed.
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Insolvency & Bankruptcy
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2019 (6) TMI 330
Liquidation of the corporate debtor - HELD THAT:- The period of 180 days for completion of the insolvency resolution process is expiring on 16.02.2019 and the decision of the CoC was taken in this respect in the meeting held on 22.01.2019. The last date for receiving the Expression of Interest was 19.11.2018, but no resolution plan was received. As Resolution Professional submits that this application has been filed by the Resolution Professional on the basis of the resolution of the CoC recommending the Resolution Professional as Liquidator and a reference is made to the resolution to this effect at page 46 of the paper book. The instant application was filed on 29.01.2019. The Resolution Professional has also furnished his consent in Form AA at Annexure 7 with the application for being appointed as the Liquidator in terms of Section 34 (1) of the Code. He has given all the necessary particulars as required and perusal of the Form, we find the same to be in order. We order the liquidation of the corporate debtor M/s Sadhbhawana Impex Private Limited and appoint Mr.Sanjay Kumar Aggarwal, Resolution Professional as the Liquidator for the purposes of liquidation of the corporate debtor in terms of Section 33 (2) of the Code. His appointment as such will be with effect from the date of receipt of copy of this order. All the directions/requirements and provisions of Chapter III of the Code and Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (hereinafter referred to as Liquidation Process Regulations, 2016) shall be strictly complied with. he Liquidator shall publish public announcement in accordance with Regulation 12 of the Liquidation Process Regulations, 2016 and in Form B of Schedule II
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PMLA
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2019 (6) TMI 329
Offence under PMLA - provisional attachment - HELD THAT:- It is not an appropriate case where the discretion, extraordinary in nature available to this Court should be exercised in favour of persons against whom there are serious allegations of money laundering and who are prima facie found to be not co-operating in the matter of investigation and enquiry into the matter. Even though Shri Vikram Chaudhary, learned Senior Counsel had tried to indicate before us that all these allegations are false, in the peculiar facts and circumstances of this case, we are of the considered view that it is not appropriate for us to interfere into the matter when petitioner can very well show-cause to the provisional attachment order passed, demonstrate its bona fides before the competent adjudicating authority and after the competent adjudicating authority passes an appropriate order, the same can be challenged in accordance with law and therefore conscious of the fact that various writ petitions challenging the constitutional validity of the said provisions are pending before this Court and we had granted some interim relief in this case, at this stage, looking to the totality of the facts and circumstances of the case, we are not inclined to exercise our extraordinary jurisdiction and interfere into the matter. We dismiss the petition with liberty to the petitioner to show-cause to the impugned action taken and take recourse to such remedy as is permissible under law.
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Service Tax
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2019 (6) TMI 328
Extended period of limitation - malafides on the part of the appellant - demand of service tax - Business Auxiliary Service - appellant paid certain commission to their overseas agent, who was procuring the purchase order for the appellant - reverse charge mechanism - HELD THAT:- Whatever service tax would have been paid by the appellant, the same is entitled as the Cenvat credit to the appellant. This fact is not in dispute, therefore, malafides on the part of the appellant are missing for non-payment of service tax under reverse charge mechanism - the extended period of limitation is not invokable - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 327
Taxability - Healthcare services - services received by beneficiaries below poverty line under the scheme where the insurance was offered by the ICICI Lombard General Insurance Company. - HELD THAT:- The issue is no more res-integra and is decided in the case of HIGHWAY HOSPITAL AND VARUNA HOSPITAL VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, ALLAHABAD [ 2019 (5) TMI 662 - CESTAT ALLAHABAD] where it was held that The requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider, then it satisfies the definition of health services provided under Section 65(105)(zzzzo) of Finance Act, 1994 - the services rendered the appellant were chargeable to service tax. Benefit of N/N. 12/2003-ST dated 20.06.2013 - Supply of medicines or not - benefit denied to the appellant since the sale of the medicines was not established through the record - HELD THAT:- The Original Adjudicating Authority has observed that the appellant had submitted a chart before him prepared by them on the basis of Online billing sent to M/s ICIC Lombard for charging the said amount payable in respect of each and every beneficiary patient with their unique ID number and the amount charged included details about the breakup of cost of medicines, nursing charges, Anesthesia charges, Surgery Charges, Consultants fees, O.T. charges, Bed charges etc. we note that the claims made by the appellant with the insurance company were honored and payments were made to them. This establishes that the cost of medicines incurred during the treatment have been reimbursed by insurance company, which establishes the sale of medicines to the insurance company - the evidence for sale of medicines is provided during the proceedings before the Original Adjudicating Authority and since such evidence is available, the appellants were entitled for the benefit of said notification. Penalties - HELD THAT:- The issue is of bonafide interpretation of provisions of law - penalties set aside. Appeal disposed off.
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2019 (6) TMI 326
Nature of activity - Manufacture or Business Auxiliary Services? - processes of chilling, pasteurization, homogenization and standardization etc. to convert raw milk into toned milk - HELD THAT:- On going through the definition of business auxiliary services, it is found that the same excludes a service which amount to manufacture of excisable goods. As such it can be safely concluded that if the processes or production for and on behalf of another person amounts to manufacture, the same would not get covered by the definition of business auxiliary services. Admittedly the processes undertaken by the appellant are for the purpose of rendering the raw milk as marketable product for the ultimate consumption of general public and as such, would get covered by the said Chapter note conferring a deeming status. The milk in question is known differently in the market and amongst the people, who use it. As such, the final product i.e. toned milk being separate and distinct from the raw milk has to be held as a manufactured item. If that be so, the definition of business auxiliary services would not be satisfied inasmuch as the same specifically excludes the processes which amount to manufacture - the appellant is not undertaking the chilling processes only, but there are further processes of pasteurization, homogenization and standardization etc., thus undertaking the manufacturing process beyond doubt. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 325
CENVAT Credit - duty paying documents - denial on the ground that the invoices were in the name of their call centre whereas the same should have been in the address of the head office, which is the registered premises with the Service Tax department - HELD THAT:- Inasmuch as the orders were being placed from the call centre, all the invoices of the service providers were issued by them at the address of the call centre. All the activities are undertaken at their call centre from Sector 58 and the output services are also being provided from the said premises - We also find favour with the assessee s contention that inasmuch as output services were being provided from Sector 58 Call Centre and the services were being received at the said premises, the invoices showing the address of sector 58 i.e. the place of actual receipt of the inputs services and their consumption for providing output services, is appropriate. CENVAT credit - denial on the ground that some of the invoices were not even in the name of the assessee, though the address in the invoices matches with the address of the assessee - HELD THAT:- The invoices in question were issued by the input suppliers under the name of the previous companies, as the orders were placed prior to the date of merger, which could not be intimated and changed in the name of the freshly situated merged company. This is only for a limited period and thereafter all the invoices were issued in the name of the present appellant - The invoices under dispute and issued in the name of the erstwhile name of the company, related to the input services which were actually received by the appellant at their call centre premises and were used for output services. The denial of the credit on the said ground is not justified. CENVAT credit - denied on the ground that the same was availed prior to the registration - HELD THAT:- The credit availed prior to the actual date of registration for providing output services has been held to be admissible inasmuch as there is no requirement in the Cenvat Credit Rules by an assessee to be registered for availing credit - credit allowed. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (6) TMI 324
Review of the order - Rule 1 read with Section 151 of the Code of Civil Procedure - HELD THAT:- Review application is allowed and the order dated 7.5.2018 passed by this Court is recalled. The appeal is ordered to be restored to its original number.
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2019 (6) TMI 323
Permission for Withdrawal of appeal - HELD THAT:- The Civil Miscellaneous Application is hereby allowed and applicant-appellant is permitted to withdraw the present appeal. In view of the order of even date passed in CM-25078-CII-2018, the present appeal stands dismissed as withdrawn.
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2019 (6) TMI 322
Effective date of the notification - Wrong availment and utilization of CENVAT Credit of Education Cess (EC) and Secondary Higher Education Cess (SHEC) - credit availed on or after 01.03.2015 but before the issue of notification 12/2015-CE (NT) dated 30.04.2015 - Rule 3(7)(b) of Cenvat Credit Rules, 2004 - HELD THAT:- The notification does not indicate that it is intended to have retrospective application. It is now well settled legal principle that all fiscal statutes and provisions should be treated as if they have only prospective application unless the law specifically indicates otherwise. In this case, not only does the notification not indicate that it will have retrospective application, it also states specifically that it shall come into force from the date of publication in the official gazette which is 30.04.2015. Therefore, the unamended provisions of Rule 3(7)(b) apply prior to 30.04.2015, according to which the appellant could not have utilized Cenvat Credit of EC SHEC towards payment of Basic Excise Duty. After this date, they could have taken credit of the inputs or capital goods received in the factory on any day after 01.03.2015 and utilize it for the payment of Basic Excise Duty. Appeal dismissed - decided against appellant.
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2019 (6) TMI 321
Valuation - parts/components of pre-engineered buildings were being cleared by them to the site as also to their other own units located at various premises - related party transaction - quantification of the demand - HELD THAT:- Admittedly, the Adjudicating Authority has relied upon the two reports given by the Range Superintendent which were not provided to the appellant. Their comments were never sought on the same. Further principals as enunciated in CAS-4 are required to be applied strictly and the same refers to the cost of the goods and not to value as reflected in the invoices - We further note that the bought out items purchased by the appellant cleared as such will not attract provisions of Rule 8 of the Valuation Rules. Inasmuch as the disputed issue relates to the correct quantification which can be done only at the level of Original Adjudicating Authority, we deem it fit to set aside the impugned order and remand the matter for fresh decision. Needless to say that the reports relied upon by the Adjudicating Authority would be provided to the assessee with an opportunity to them to put forth their case. Appeal allowed by way of remand.
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2019 (6) TMI 320
CENVAT credit - inputs - capital goods - cenvat entries pertaining to capital goods were captured wrongly in the head of inputs registered in the system and appellant availed 100% credit in the first year itself - HELD THAT:- It is made clear that the appellant was entitled to avail 50% of the credit in respect of various capital goods, in the first financial year when they received the capital goods. The balance 50% would be availed by them in the next financial year. All the debit/ credit entries made in respect of the credit are required to be allowed so as to neutralize the situation - As such the confirmation of demand in question in the above two appeals leading to denial of credit of duty paid on the capital goods is not justified. It is made clear that the appellant would get the credit of duty paid on the capital goods in accordance with law i.e. 50% in the first financial year and 50% in the subsequent financial year. Apart from that any excess credit availed is required to be reversed back and any excess debit made by them is required to be neutralized. Such exercise can be done by the Original Adjudicating Authority. Demand of Interest - HELD THAT:- The credit, though availed, was not utilized by them and in terms of the Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] the excess unutilized credit would not call for any confirmation against the appellant - demand set aside. Penalty - HELD THAT:- The entire availment of credit by reversing the same in the books of accounts was the subject matter of communications between the appellant and their Jurisdictional Central Excise Authority. The appellant have also attributed the said inadvertent mistake to the newly introduced SAP system. As such, in the absence of any mala fide on the part of the appellant. Imposition of penalty upon them is not justified - penalty set aside. Appeal disposed off.
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2019 (6) TMI 319
Imposition of penalty on Sh. Prem Khanna, M.D. - crossing of threshold limit - Whether in view of the admitted liability when appellant did not pay duty for four years after crossing the SSI limit and Sh. Prem Khanna was in overall control of affairs, the penalty on Sh. Prem Khanna, M.D. is to be upheld and the appeal dismissed, as held by Member (Technical)? - Difference of Opinion - Majority Order. HELD THAT:- Both Members were in agreement to remand the matter to the adjudicating for fresh calculation of demand payable by the main party. In that circumstance, the whole order is required to be reconsidered by the adjudicating authority for both the appellants before this Tribunal. Therefore, I agree with the observation made by the by the Hon ble Member (Judicial) in her order. For the issue of imposition of penalty on Shri Prem Khanna, M.D. is also remanded back to the adjudicating authority.
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2019 (6) TMI 318
CENVAT Credit - taxable as well as exempt services - Rule 6(3)(i) of Cenvat Credit Rules, 2004 - reversal of proportionate amount of Cenvat Credit in terms of Rule 6(3A) of CCR, 2004 or paying 5%/6% of the value of exempted services? - HELD THAT:- It is not in dispute that before the first appellate authority or the lower authority, the appellant has not produced evidence of having reversed proportionate amount of Cenvat Credit. The appellant has now produced a Chartered Accountant s Certificate along with annexure which indicates the total turnovers as well as exempted turnover and the proportionate amount of Cenvat Credit to be reversed. After deducting the amount already reversed, they said to have paid differential amount just five days ago through challan dated 02.05.2019 along with interest - Subject to verification of this information by the lower authorities, the appellant is entitled to reverse proportionate amount of Cenvat Credit and need not pay amount equal to 5%/6% of value of exempted services rendered. CENVAT credit - input services - manpower supply services - denial of credit on the ground that there is no evidence that the invoices pertain to the services provided in their Visakhapatnam unit - HELD THAT:- The only point of dispute is that invoices were raised in the address of the appellant s Hyderabad office and they did not indicate that they pertain to the services rendered in Visakhapatnam. However, now that appellant has produced a letter from manpower supplier that the services in respect of the disputed invoices were rendered in Visakhapatnam and billed in address of their Hyderabad office - The appellant is entitled to Cenvat Credit, subject to verification. Appeal allowed by way of remand.
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2019 (6) TMI 317
CENVAT credit - inputs - welding electrodes used within the factory of manufacture after 01.04.2011 - HELD THAT:- It is not in dispute that the welding electrodes in question were used after 01.04.2011 when the definition of inputs has been enlarged to include all goods used in the factory of manufacture of the final products subject to some exceptions. The only exception which the department relies on is clause (F) of Rule 2(k) on the ground that the welding electrodes being used in the maintenance and repair of capital goods have no relationship whatsoever with the manufacture of the final products. If welding electrodes are used for repair and maintenance of machinery and such machinery are used in manufacture of final products and the welding electrodes are used within the factory of manufacture, they are squarely covered by the definition of inputs under Rule 2(k) of CENVAT Credit Rules 2004. Appellant are entitled to CENVAT Credit on the welding electrodes so used - credit allowed - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 316
CENVAT Credit - capital goods - credit denied on the ground that at the time of procuring of capital goods, the appellant was availing Area Based Exemption under N/N. 50/2003-CE dated 10.06.2003 - Rule 4 (2) (a) of Cenvat Credit Rules, 2004 - HELD THAT:- If the capital goods have been procured by the assessee, he is entitled to take cenvat credit on the said capital goods to the tune of 50% of the credit in the financial year in which capital goods have been procured and remaining 50% in the next financial year. Further, in terms of Rule 4 of Cenvat Credit Rules, 2004 no cenvat credit shall be allowed on capital goods which are used exclusively manufacture of exempted goods or providing exempted services. In the case in hand after 27.11.2013, the goods manufactured by the appellant became dutiable as the exemption under Notification No. 50/2003-CE dated 10.06.2003 was expired. As per Rule 4 (2) (a) of CCR, 2004 the assessee is entitled to avail cenvat credit in the financial year in which the capital goods have been procured. Admittedly, in the case in hand, the appellant is taken cenvat credit on the capital goods for the same financial year when they were manufacturing dutiable as well as exempted final product, therefore, the appellant are entitled to avail cenvat credit in terms of rule 4 (2) (a) of CCR, 2004. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (6) TMI 315
Conditional stay pending disposal of appeal - HELD THAT:- In Ext.P5(c) the petitioner, since has already deposited 20% of the total demanded amount and time till 30th July, 2019 is granted for depositing the balance 10% - petition disposed off.
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2019 (6) TMI 314
Levy of tax on the packing material of sugar - Section 4B of the 1948 Act - HELD THAT:- The assessee claimed that the gunny bags purchased by the appellant sugar mill and used as packing material for sugar, there was no tax applicable as the assessee sells sugar and not gunny bags. It was urged that no separate price was charged for the packing material which is essential for selling and stocking sugar. In Raj Sheel and others Vs. State of A.P. and others [ 1989 (5) TMI 292 - SUPREME COURT] , the Apex Court held that where sale is a composite transaction of sale of goods only, component sale of packing material cannot be treated separately for determining turn over. In a case where the packing material is an independent commodity and the packing material as well as the contents are sold independently, the packing material is liable to tax on its own footing. Whether in the facts and in the circumstances of the case, the order levying tax under section 4B on gunny bags being an essential packing material for sugar passed by respondent No.4 as upheld by the VAT Tribunal which were purchased from outside the State of Punjab and have already suffered tax is correct in law in view of the various pronouncements in this behalf? - HELD THAT:- In the absence of any categorical record based finding regarding the terms of agreement relating to price of the gunny bags viz-a-viz the price charged for sugar sold, for which the Tribunal is the final fact finding authority, it is considered appropriate to remand this issue to the Tribunal to decide afresh after considering the case law on the point and also in the background of the factual matrix involved in the case - the issue is remitted to the Tribunal to decide the same afresh in accordance with law. Whether in the facts and in the circumstances of the case, VAT Tribunal, Punjab, Chandigarh has erred in law in upholding the order of the Assessing Officer dated 17.10.2003 passed in reassessment proceedings levying purchase tax on Sugarcane @ 8.8% for the period from 25.1.2000 to 31.3.2000 without there being any notification of the rate of tax which levied instead of the rate of 2.2% earlier levied in the original order of assessment dated 14.3.2003 on the basis of notification dated 28.8.1998? - HELD THAT:- The Assessing Officer charged purchase tax at the rate of 8.8% for the period from 25.01.2000 to 31.03.2000 during the year 1999-2000 which had been assailed by the appellant-assessee. It was claimed that rate of purchase tax on sugarcane for the aforesaid period should be 2.2% on the basis of notification dated August 28, 1998. The claim of the assessee was rejected by the assessing authority and the appellate authority i.e. Deputy Excise and Taxation Commissioner (Appeals), [DETC (A)]. In the absence of the learned counsel for the appellant to show that any final decision had been taken by the Government with regard to charging of purchase tax at the rate of 2.2% for the period from 25.01.2000 to 21.03.2001, the assessee cannot derive any benefit from the proceedings dated 9th September, 2005 on the issues of Co-operative Sugar Mills as recorded in Annexure A.8 - we are not convinced that for the period 25.01.2000 to 31.03.2000, the rate of purchase tax was to be 2.2% instead of 8.8% - question is answered against the assessee-appellant. Appeal disposed off.
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Indian Laws
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2019 (6) TMI 313
Appointment of arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- Since the parties have agreed to resolve the disputes amongst them by taking recourse to the remedy available under Clause-25 of the agreement, i.e in terms of the provisions of the Arbitration and Conciliation Act, 1996, this Court deems it fit and proper to recall the order dated 4.10.2018 passed in CWJC No. 13292 of 2018, whereby and whereunder the petitioner was directed to move the Bihar Public Works Contract Disputes Arbitration Tribunal, and grants liberty to the petitioner to take recourse to appropriate remedy available under the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator for resolving the dispute, which has arisen in between the parties. It is directed accordingly. Review petition allowed.
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2019 (6) TMI 312
Dishonor of Cheque - section 138 of NI Act - cancellation of suit - HELD THAT:- Though the counsel for the plaintiff in her arguments has repeatedly gone into the merits of the challenge also but the question seized at the moment being only of maintainability of the suit and for which reason the written statement of the defendants also has not been noted hereinabove, I have steered clear from the arguments on merits which are to be considered only in the event of the suit being found to be maintainable in this Court and in the event of the suit being not found to be maintainable, before the appropriate forum. The suit on the basis of averments in the plaint to be not disclosing a cause of action and being barred by law and dismiss the suit.
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